KEY POINTS:
Want to raise a mortgage in these dark financial days? Bank vaults are still full of money and most sound keen to lend it.
Apparently what needs to change in this global credit crunch is you - and your attitude to becoming a mortgagor.
While you're watching
house prices fall and thinking "location, location, location", you should adopt a second mantra: "information, information, information".
Lenders, who even six months ago were behaving like everybody's favourite uncle, are today narkier in their demand for information.
They will want to know a lot about the sustainability of your earning power, weekly costs, credit history, and past attitude to paying bills and meeting financial commitments.
"Serviceability" is the buzz word. Expect lenders to take a microscope to your ability and commitment to meet mortgage repayments however volatile the economy becomes.
And you'll probably have to put a bit more of your cash on the table.
But 100 per cent finance is still possible, and a 10 per cent deposit should "get you through" says broker Michael Paris, of MortgageLink, despite reports of a 20 per cent down payment being the bottom line.
ASB Bank's head of retail banking, Ian Park, says in this housing market and weak economy, "Buyers should be doing a lot more research on the value of the property".
Borrowers in this time of recession can no longer rely on regular overtime and bonuses to help meet mortgage repayments. They'll have to prove to the bank they can "comfortably" service the loan during turbulent days of rising costs and a falling Kiwi dollar.
Kiwibank says that it has never been more important to have a clean credit record.
"If you've been a bit cavalier about a debt or simply didn't care... you might find that comes back now to bite you," says Kiwibank's communications chief Bruce Thompson.
"But if you have a good credit record and a good savings record and, particularly, if you have a 20 per cent or more deposit, then banks... are very keen to talk to you."
Kiwibank will continue to lend up to 95-100 per cent - but, as always, only in certain cases where people qualify under the government guaranteed Welcome Home scheme and only with built-in insurance, which comes at a cost to the client.
Kiwibank insures all loans of more than 80 per cent, Thompson says.
Wizard Home Loans managing director John Grant says there are strategies for raising the higher deposit. Parents can strengthen a deal with a gift or loan toward a deposit, and can be a joint signatory to a first mortgage.
"Join someone with a positive lending history, it doesn't have to be a life partner," Grant says. "It can be someone who brings strength to the deal.
"Don't hide anything, don't leave it to the lender to find out. You need to be upfront if there is something not so positive in your financial past."
MortgageLink's Paris says, including the big four trading banks and Kiwibank, there are still about 35 property lenders in the market.
Admittedly, second-tier lender numbers have declined considerably, but they are still out there. Paris claims a current 98 per cent success rate in securing mortgages for clients.
But ASB's Park and Wizard Home Loans say there are few lenders in the mortgage market apart from the big four, Kiwibank and TSB, and some building societies. Wizard's parent GE Money exited the Kiwi mortgage market, and Wizard is for sale.
Property investors wanting to buy rentals can expect to have to put money on the table, instead of using one property as equity to borrow 100 per cent on another.
Banks will be concentrating more on security cross-collateralisation, says Wizard's Grant.
A requirement for a multiple landlord wanting to sell a heavily mortgaged property to first discuss what happens to the sale proceeds with the lender is not new.
"When a property is purchased using equity from other properties, a lender looks on one hand at the total amount they've got lent and on the other side at the total amount of security," says Grant.
"They don't separate one loan to one security. Therefore if you sell one property, that is the lender's security and the lender is legally entitled to the full proceeds. It's not new but there will be more concentration on it."
The lenders will be doing more "stress-testing" of any landlord's financial situation.
The risk of a property being vacant for a period will get extra attention when the sums are done.
"During the heydays it was all good news and people were gearing relatively highly on buying investment properties," Grant says.
"Not only were they taking all their equity [in one property] and inputting into buying another, but they were right on the maximum they could borrow in terms of the income being generated from properties.
"Now there's a lot more buffer being put in to ensure there is a degree of safety within these loans."
Park says "true" property investors - as opposed to people who bought a second property in the bull market with an eye to capital gain and not rental return - who keep their gearing conservative and know the returns they require to make the investment profitable will "be okay" in this crisis.
MORTGAGE CHECKLIST
Wizard Home Loans' managing director John Grant offers this checklist for mortgage shoppers.
As well as a stable income, it is desirable to have:
* Adequate savings.
* A good track record of paying your bills on time.
* A proven positive payment history on other loans.
* Evidence that you are buying within your income capability.
